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ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has allowed Discos' to increase average tariffs by Rs1.6236 per unit for two quarters under quarterly tariff adjustment mechanism, to be applicable from October 2020.

Well-informed sources told Business Recorder that tariff adjustments under QTA mechanism are necessary to meet the conditions of the IMF to resume the suspended programme.

According to Nepra the new quarterly adjustments are for the 2nd and 3rd quarters of FY 2019-20 having average impact of Rs.1.62/kWh. These adjustments shall replace the already notified quarterly adjustments of Rs.0.93/kWh (average) pertaining to 1st and 2nd quarters of FY 2018-19 and Rs.0.33/kWh (average) pertaining to 3rd and 4th quarters of FY 2018-19 and Rs.0.20/kWh Interim DM for FY 2018-19, which all shall expire on Sep. 30, 2020. Thus, the existing consumer end will be maintained to a greater extent.

The adjustment in quarterly tariff on account of variation for second and third quarter from October 2019 to March 2020 will be passed in the bills of October as collection of previous quarterly adjustment will have been completed. This will not have any additional impact on electricity rates of consumers.

The quarterly tariff adjustment ranges from Rs1.09 to Rs1.89 per unit depending upon the consumption of electricity.

CPPA-G claims that circular debt of energy sector has been recorded at Rs45 billion per month due to delay in determination and notification by Nepra and government respectively. CPPA-G is also asking for another increase in tariff for the fourth quarter (April-June 2020) under the QTA mechanism.

The country's circular debt is over Rs2.2 trillion, which has choked the entire energy sector starting from generation companies to transmission and distribution companies.

CPPA-G, which is responsible for purchasing power from the generation companies (private or government-owned), is getting loans from Discos in violation of rules to meet its financial requirements.

Acting Chief Executive Officer (CEO) of CPPA-G informed a panel of Senate that the energy sector's circular debt increased by 18 per cent during fiscal year 2019-20 to Rs538 billion from Rs465 billion in FY2018-19. He said the circular debt recorded a growth of Rs45 billion per month of which Rs240 billion was added due to Covid-19 and Discos' inefficiencies.

He maintained that Rs136 billion was added in the circular debt due to Discos' inefficiencies. Of this, Rs90 billion was added during July-February 2019-20 and Rs46 billion during March-June 2019-20.

Director-General of Nepra, Sajid Akram, informed the committee that the amount of Rs136 billion would be taken as bad debt, and such type of operational inefficiencies could not be recovered from the consumers.

According to CPPA-G, Rs104 billion was added in the circular debt due to the Covid-19 impact, of which Rs50 billion was on account of deferment of domestic consumers' bills payment and Rs54 billion due to change in the consumer mix.

The sources said that Nepra is following government directives for delay in announcement of tariff determinations due to which the power sector's circular debt has increased manifold as compared to the claims of the Power Division.

For quarterly adjustments, Discos have sought an adjustment of Rs162.363 billion for two quarters (second and third quarter 2019-20).

Discos had sought increase in electricity tariff up to Rs2 per unit under the quarterly tariff adjustment mechanism for second and third quarter from October 2019 to March 2020, but Nepra is expected to approve Rs1.60 per unit.

According to the tariff petitions, Discos had sought adjustment of Rs72.770 billion for second quarterly adjustment October to December 2019, of which Rs60.84 billion is required under Capacity Purchase Price (CPP), Rs2.851 billion against variable O&M cost, Rs1.662 billion, UoSC & MoF, Rs7.778 billion as impact of T&D losses on monthly FCA and Rs95 million as impact of extra/less purchases.

For the third quarterly adjustment January to March 2020, Discos sought adjustment of Rs89.363 billion, of which Rs82.385 billion is CPP, Rs1.5 billion variable O&M, Rs1.188 billion UoSC & MoF, Rs4.555 billion impact of T&D losses on monthly FPA. Discos sought reduction of Rs20 million as impact of extra/less purchases.

Copyright Business Recorder, 2020